Morgan Stanley Fends Off Hedge Fund Lawsuit

Jul 25 2013 | 10:32am ET

Morgan Stanley will not have to defend itself against an energy hedge fund's breach of contract claim, a federal judge has again ruled.

U.S. District Judge Andrew Carter in March dismissed most of Peak Ridge Commodities Volatility Fund's countersuit against the bank, which alleged that Morgan Stanley violated its agreement with the hedge fund when it seized a Peak Ridge natural-gas account after the hedge fund missed a margin call. The hedge fund asked Carter to reconsider, pointing to a phone call in which a Morgan Stanley representative said it would have more time to comply with the higher margin requirement.

But Carter said he hadn't overlooked the phone call—he was just enforcing the part of the contract that required modifications to be written, rather than oral. And even if the representative's assurances were binding, they were irrelevant, coming as they did after the margin deadline passed.

Carter allowed one claim—that Morgan Stanley was guilty of a conflict of interest when it handed Peak Ridge's account for liquidation to a trader who was competing with the hedge fund—to stand. Peak Ridge alleges that the trader caused it losses of $32 million.

For its part, Morgan Stanley accuses Peak Ridge of saddling it with $40.6 million in losses.


In Depth

Fund Manager's Disease: Common Symptoms and Proposed Remedies

May 3 2016 | 6:11pm ET

The cadre of 25 research analysts at Murano Systems speaks with more than 150 investors...

Lifestyle

Point72's Cohen Donates $275M To Veterans Mental Health Network

Apr 6 2016 | 8:31pm ET

Billionaire hedge fund manager Steve Cohen has formed a non-profit aimed at treating...

Guest Contributor

Agecroft: Why NYCERS Should Reconsider Exiting All Hedge Funds

Apr 18 2016 | 5:51pm ET

The recent decision by the New York City Employment Retirement System to exit its...